KFM Weekly Investment Update: Friday, 10 March 2017

Local Market Summary

• Two finance agreements worth K570.4m have been signed between the PNG Government and the European Union for water and sanitation projects as well as capacity building project. The agreements pave the way for funding of the Water, Sanitation and Hygiene Part 1 program and capacity building of the National Authorizing Office (NAO). The agreements were signed by EU Ambassador to PNG Ioannis Giogkarakis-Argyropoulos, and Minister for Planning and Monitoring Charles Abel

• Trade levels between PNG and Indonesia could double or triple if existing plans between the two governments are fully implemented, according to Indonesia’s Ambassador to PNG Ronald Manik. Mr Manik said Indonesia’s economic prospects were positive and that enhanced links with PNG would be mutually beneficial for both. Indonesia and PNG signed a plan of action for the implementation of the comprehensive partnership between the two countries

• Australia’s Foreign Minister Julie Bishop opened a Consulate-General in Lae. She said the Consulate-General would allow her government to build stronger links with many Australian businesses operating in a growing part of PNG, i.e mining, agriculture, manufacturing and retail. Ms Bishop said the new post would enable Australia to better support its development partnership with PNG and provide consular and passport services to Australians in Lae and the surrounding region

• TOTAL E&P PNG renewed its license for the next five years as operator of Papua LNG project in Gulf. MD Philippe Blanchard said as developer and investor in the project, the five year license had given Total the confidence to go ahead and deliver the project efficiently and on time

• Independent Consumer and Competition Commission advised that fuel prices increased slightly between 1toea and 3toea this month due to increased Import Parity Prices (IPP). Petrol price increased to K3.24 from K3.23 from last month, similarly diesel also increased to K2.65 from K2.62 Kerosene rose by 2toea to K2.50 from K2.48. Commissioner and CEO, Mr Paulus Ain said the increases in the IPP was attributed to the increases in the crude oil prices last month

• Porgera Joint Venture gold mine in Enga Province reached a rare milestone in the mining industry in achieving 20m ounces (oz.) in gold production since it began operations in 1990. The joint venture operation between Barrick Gold Corporation, Zijin Mining Group and Mineral Resources Enga (MRE) Limited, attained the +20m oz. on the 06/03/2017 after 7,044 ounces were produced for the particular day. GM Operations-Damian Shaw commended the efforts of those involved with the operation

• The Bank of PNG’s announced that the Kina Facility Rate (KFR) for the month of March 2017 will be maintained at 6.25%

• National Superannuation Fund recorded a 10- year asset growth at an annual average of 15.50%. The 10-year growth has seen K2.13b made by the fund which has translated to an average crediting rate to member’s of 11.70% over the same period was revealed by CEO, Ian Tarutia this week

• PNG remains BSP’s leading market hub after topping other Pacific Region neighbours in 2016. PNG outperformed its regional BSP neighbours following impressive financial year which recorded a 16.00% increase in net profit after tax to K642.5m from K532.0m says BSP Board Chairman, Sir Kostas Constantinou

• K92 Mining in Eastern Highlands Province announced the commencement of drilling and blastin. The CEO of K92 mining, Ian Stalker said, Kora (known as Kora mineralization) is a large and high grade deposit zone which the drilling program is specifically designed to test its significant expansion

• This week’s BPNG auctions in Central Bank Bills were offered for 28 and 63 days with an under-subscription of K30.8m out of a total of K602.0m on offer. The weighted average yield was 1.19% and 2.34% respectively

• This week’s BPNG auctions in Treasury Bills were under-subscribed by K63.2m out of the K293.9m on offer. Weighted average yields were 2.54% for 91 days, 4.72% for 182 days and 7.81% for 364 days

• The Kina Securities Index was down 3.8% to close at 4,859.15 points, while the Kina Securities Home Index up 2.6% to close at 10, 970.59 points

International Market Summary

• Dow and S&P 500 avoid a fourth straight session of declines on Thursday one day before the government releases the monthly jobs data. Boost in private-sector employment report has helped to strengthen expectations for an interest-rate hike next week

• European shares rose on Wednesday supported by results-driven gains from German sportswear company Adidas and British security company G4S amidst losses from EDF and Boskalis. Further, Euro strengthened (0.2%) against the U.S. dollar on Thursday in light of European Central Bank indication that it may not need to roll out further stimulus measures to breathe life into Europe’s stalled economy.

• Asian equities held broadly steady reflecting a lack of risk appetite in the US overnight as global markets continued to drift. Nikkei share average rose to a one-week high on Friday morning supported by the dollar hitting six-week highs against the yen, while U.S jobs data to be released later in the day boosted investors’ confidence that US interest rates may likely rise

• ASX has selected Digital Asset Holdings to develop solutions for the Australian market utilizing Distributed Ledger Technology replacing CHESS. In this project, ASX has invested over $US17.4 million for an 8.5 per cent stake

• PGK/USD remained unchanged for the week to close at 0.3150, PGK/AUD appreciated by 0.5% to end at 0.4190, while AUD/USD depreciated by 0.5% to end the week at 0.7519